Perth – After The Pandemic

As Australia emerges from the COVID 19 pandemic, there is growing evidence of the behavioural changes which have been made in the way people live, work and shop; all of which is likely to have long term implications for our major cities.

Even though last remnants of the restrictions have extensively been lifted, some significant difference in Post COVID Perth remain. The City has changed.

An analysis of commuting patterns, as well as commercial and residential property markers, illustrates the flow-on effects of increased working from home; a practice which has become more prevalent following the pandemic.

A major post COVID 19 change has been to commuting patterns. In Perth, despite the lifting of compulsory mask mandates, there has been a significant drop in public transport usage. Transperth data shows patronage is down 35.6% from pre-COVID 19 levels. In comparison, Sydney, where restrictions were in place for longer than Perth, and lifted in December 2021, public transport use remains down 14.6%.

In response to the fall-off in public transport usage, car travel has risen 1.1% on Perth’s major city access roads, which represents approx. 5,000 additional cars per day. In Sydney, car commuter traffic is down 19.6% from pre-pandemic levels.   

Perth’s office vacancy rate has declined from pre-COVID 19 levels aided, in part, by leasing incentives and stock withdrawals. Even so, the drop in daily commuters, compounded by a structural increase in on-line shopping, has resulted in commercial retail vacancies increasing by more than 30% from pre pandemic levels.

This PAR Group’s analysis, undertaken by Damian Stone of Y Research and Rob Ellis of The Data App, examined changes to commuting patterns, commercial property occupancy and yields, e-commerce spending and residential property transactions from pre-pandemic levels, to identify the impact of the COVID 19 pandemic on way Sydney and Perth residents live, work and shop.  

 Key Perth Results

• Working from home, as well as fears of virus transmission, resulted in a significant change in Perth’s commuting patterns. In spite of a lifting in restrictions, public transports trips are down 35.6% from pre COVID levels. This decline is marginally offset by a modest 1.1% in car usage on key access roads into the city.
• Perth’s changed commuting patterns has resulted in fewer people going to work in the city. The Property Council, estimate, compared to 2020 levels, only 50% of the existing daily office workforce have physically returned.
• As a consequence, the city retail sector has been significantly impacted. A lower footfall has been compounded by a 189.8% increase in the share of online spending compared to pre-pandemic levels. This has contributed to the vacancy rate for city retail property increasing by over 30%; now 17.8% compared to 12.8% prior to the pandemic.
• The global wall of capital, facilitated by record low interest rates, helped fuel house price growth in Perth, rising in excess of 10% from pre COVID levels. The ability to work remotely during the pandemic bolstered demand outside of Perth even more, with prices rising just under 25% over the same time frame.
• The implications of these behavioural changes for commercial property are yields on retail assets are down 68 basis points, while industrial assets, bolstered by the surge in e-commerce, have fallen a shade over 200 basis points in WA. Conversely office yields have softened 101 basis points.
• In spite of border restrictions, the population of WA grew by 1.5%, or 751 people per week. This growth, despite border restrictions is linked to strong natural growth as well as the likely return over 6,000 West Australian from the east coast.

The table below outlines some of the transformations to Perth’s way of life resulting from the pandemic and some of the ramifications on the property sector.